For the first time over 13 years Armenian banks did not report double-digit growth of their assets

26.01.2016 18:12
For the first time over 13 years Armenian banks did not report double-digit growth of their assets

YEREVAN, January 26. / ARKA /. For the first time over the last 13 years Armenian commercial banks did not report double-digit growth of their assets in 2015, according to ARKA news agency’s quarterly bulletin ‘Banks of Armenia’. Last year the banks’ combined assets saw only a 4.65% growth to about 3.6 trillion drams.

The slower growth of the banks’ assets is blamed on the declining lending. For example, in 2015 Armenian banks’ lending grew by only 0.69% to about 2.2 trillion drams, down from 21.2% growth in 2014. Since 2003, the assets of Armenian banks would grow from 20 to 40% annually.

However, experts say the old model that secured a high rate of growth by attracting new customers and large-scale lending, is no longer working. In their view, the overall economic situation, in particular, the economic slowdown along with dwindling consumption, do not allow the banks to grow unabated and attract new creditworthy borrowers.

The growth rate of bank assets began to slow down in 2014. In 2015, when the national currency, the dram, began to devaluate, the asset growth rate began a steep decline. In particular, in January – September 2015 they decreased by 2.1% from the beginning of the year and the banks’ lending decreased by 4.3%.

A Moody’s report said last year CIS banks will be affected by lower oil prices and Russia’s recession through pressures on local currencies, declines in remittances from CIS nationals working in Russia, and lower exports from CIS countries to Russia. Moody’s report said also banks in Armenia will be moderately affected, reflecting the relatively modest devaluation in the dram, but its highly dollarized banking sector will face increased asset quality pressure if the dram continues to depreciate.

In turn Fitch Ratings downgraded its outlook for Armenian banks in 2016 to negative. The rating agency says this negative outlook is driven by the weaker operating environment in Armenia, with an economic slowdown (Fitch forecasts slower 1.5% GDP growth in 2015, down from 3.4% in 2014, before a moderate recovery to 2.5% in 2016), depreciation pressures and higher interest rates. -0-


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Tags: , Новости Армении АМИ Новости-Армения

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